How to Determine Car Insurance Liability Limits

1.

Learn the minimum liability limits required by your state.

2.

Determine your assets. Insurance is meant to protect what can be lost in a lawsuit.

3.

Think about the ages of the drivers in your household. Youthful drivers have more accidents resulting in lawsuits.

4.

Realize you share liability for your children until they reach a specific age.

5.

Consider your profession. If you work in the public eye or if you work in a profession perceived to have high income, you're likely to face larger lawsuits.

6.

Understand that numerous cars on the road are worth more than the $25,000 property damage limits afforded by a basic policy.

7.

Realize that you may be liable for damage to more than one vehicle if you cause a chain reaction accident.

Tips and Warnings

  • Car leasing companies may require specific liability limits.
  • If you use your car on the job, your employer may demand high limits.
  • "25/50/25" means your insurance company will pay up to $25,000 if one person is injured or killed, $50,000 if more than one person makes a claim and up to $25,000 in property damage.
  • Consider a personal liability umbrella policy instead of boosting your car insurance to the maximum limits if you have significant assets.